The government bars companies from sharing users' data with third-party entities even if they consent, in the new policy.

Some stakeholders of the e-commerce industry have asked the Centre to relax data storage rules to allow firms to share data at least with its group companies, The Financial Express reported. This request was raised in a meeting held by the Department for Promotion of Industry and Internal Trade (DPIIT) weeks after it released its draft e-commerce policy.

The government bars companies from sharing users' data with third-party entities even if they consent, in the new policy. This can mean that Amazon's Indian arm cannot share data with Amazon Inc. This could impediment potential acquisitions and investments from foreign companies in Indian startups.

Some firms suggested that the government should only access data stored by companies abroad in cases of law and order cases. At present, the draft policy allows Indian authorities to access the data whenever they want. The stakeholders argued that this could lead to potential misuse.

"We have suggested DPIIT that the e-commerce policy be split into an e-commerce policy and a business data policy and the business data section should cover all businesses including telecom, banks, offline trade etc. and not just e-commerce, social media and technology," said Sachin Taparia, founder and chairman of LocalCircles, who attended the meeting.

Industry giants including Amazon, Microsoft, Netflix, Uber, Ola, Reliance and traders' organisations had no issues with the government's demand to store data locally.

The new policy released by the government on February 23 proposes new regulations for cross-border data flows, ensuring data storage facilities locally and setting up a data authority to devise a framework for sharing data. The DPIIT is accepting feedback on the draft policy till March 29.

The government does not allow companies to collect data in India and store it overseas to share it with foreign oganisations or any third party, saying that India has a 'sovereign right' over its data. Foreign companies operating in India have been granted three years to set up their storage units in India.